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    Did the Latest Russian-Ukrainian Gas Dispute Almost Backfire on Moscow?


Gazprom’s Latest Energy Move Could Generate Significant Legal and Reputational Problems for the Kremlin

by: Alan Riley

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Featured Articles, Pipelines, Security of Supply, News By Country, Russia, Ukraine

Did the Latest Russian-Ukrainian Gas Dispute Almost Backfire on Moscow?

Check the International Law Implications Before You Deploy Energy Tactics on the Ukrainians

Ukraine and Russia appeared until last Friday to be heading to their fourth gas supply dispute in under a decade. Gazprom was claiming non-compliance with the 30th October 2014 agreement brokered by the EU. It claimed that Ukraine had not kept up pre-payments for Russian gas supplies as required by the October deal. However, on closer examination Gazprom is basing its calculations on gas supplied to Ukrainian territory under Russian occupation. At first sight this appeared to be a clever tactic to seek to persuade Europeans that the Ukraine supply route is a dangerously unstable route for EU gas imports. In fact far from being a clever tactic it involves stepping into some very dangerous legal waters. Ukraine could have in fact have used the latest Russian threat to seek to establish Moscow as the ‘enemy occupier’ of eastern Ukraine. Kyiv can rely on the provisions of the Geneva Conventions which establish the liability of the occupier to protect and provide support to people in the occupied territory. A legal ruling to the effect that Russia was the occupier and had such legal obligations or indeed owed civil damages to Ukraine would have undermined all the hybrid warfare/propaganda that Moscow has undertaken so far. It is therefore not surprising that on further reflection Russian claims for payment for the occupied territories were withdrawn on Friday night.

Under the October 2014 agreement brokered by the European Union Ukraine agreed to provisionally pay gas $3.1 billion of gas debts to Gazprom. These payments are provisional as they are subject to legal challenge by Ukraine in a Stockholm arbitration court. Ukraine also agreed to pay for all future contract deliveries it requested by pre-payment. Kyiv has made a number of pre-payments and is currently supposed to receive 114 million cubic metres a day. However, since February 22nd only 40% of that amount has been delivered to Kyiv. The reason given by Gazprom was that gas has been also sourced to the separatist controlled enclaves in eastern Ukraine and that gas has been included in Russia’s bill for Kyiv. The Ukrainians argue not unreasonably that this constitutes a breach of contract. In particular, the contract gives Ukraine the capacity to nominate the entry points for Russian gas into Ukraine and they have not nominated the eastern Ukrainian entry points Gazprom is using to supply separatist areas of eastern Ukraine. It also is rather stunning Russian bravado for Moscow to invade and occupy part of Ukrainian territory and then turn round and bill Ukraine for providing gas on the territory it occupies.

The difficulty for Moscow however is that by this action it was handing Ukraine a major legal and reputational weapon. It was giving Kyiv the means to demonstrate in international tribunals, international courts and the court of international public opinion that Russia is the ‘enemy occupier’. It is well-established under the Geneva Conventions that territory is considered occupied when it comes under the control or authority of foreign armed forces with or without the consent of the domestic de jure government. Public international law is clear that this is a factual determination. No shadow-boxing with Russian funded and armed separatists and proclamations of ‘independent republics’ allow an invading and occupying state to escape its legal liabilities and its responsibilities under the Geneva Conventions. The facts are that Russia armed and funded the anti-government groups in eastern Ukraine and they are led by Russian military and intelligence officers. All these facts weigh very heavily in favour of a finding that the military action in eastern Ukraine constitutes a Russian invasion and occupation. Since August, when large numbers of Russian forces entered Ukrainian territory that case has become ever stronger as the ‘separatists’ are now substantially reinforced by the men and materiel of the regular Russian army.

The fundamental difficulty for Moscow was that the 1949 Geneva Convention which both Russia and Ukraine have ratified imposes significant obligations upon the occupier to protect the local population. In particular, Article 69 of the 1977 Protocol (again which both Ukraine and Russia have ratified) imposes obligations for the occupying power to provide the basic needs of the population which would include heating fuel. Moscow as the occupying power cannot push the cost onto Kyiv so easily via unilaterally moving gas via entry points not agreed under contract.

The real danger for Moscow here was that Ukraine was accidentally by Gazprom’s pre-payment claims being given the opportunity to identify Russia as the ‘enemy occupier’ on its territory.  Kyiv could have for instance invoked the Geneva Conventions arguing that Russia is refusing to undertake its obligations to the people under occupation. A state party to the Geneva Conventions can seek a Red Cross inquiry into the level of support provided to persons in the occupied territory. Kyiv could also have sought to widen its arbitration hearing proceedings in Stockholm to deal with the inclusion of gas used in occupied territories. This could lead to a ruling that eastern Ukraine was indeed occupied. Thirdly, and most dramatically Ukraine could have sought a vote in the General Assembly of the United Nations to submit a case to the International Court of Justice against the Russian Federation over its failure to protect persons under occupation contrary to the Geneva Convention.

Any such ruling or finding would have been a PR disaster for Russia. It could also have resulted in significant ongoing civil liabilities exposure, both to support the population and to repay Kyiv for any costs Moscow had sought to shift on to it.

No matter how compliant with transit terms, and observant of supply agreements Ukraine is there are likely to be a lot of disputes with Russia over the next few months. For Russia triggering disputes over gas flows with Ukraine is  a means of destabilising the country, and a means of raising the question of the vulnerability of the Ukraine supply lines into the European Union. However, the Kremlin should in future avoid tactics that could in fact boomerang back on its economic, propaganda and military strategies deployed since the annexation of Crimea.

Professor Alan Riley, City Law School, City University, Grays Inn, London.